[solstice15]

I'm not an accountant, but my understanding is that sale proceeds are only taxable if you've made a profit (ie. sold for more than you paid) which is exceedingly rare in the classifieds. So, I think we're ok as long as we maintain proof of purchase and can therefore demonstrate the items were sold at a loss.

 

[stacey]

1099s suck. You get taxed at a different rate, and imagine that you try to sell a Traillii that you saved up for a bit to buy? That 1099 could potentially kick one up a tax bracket. At the very least it will increase the cost of filling your taxes.

 

[Frankie D]

Hey guys,

With the new IRS ruling that took effect at the beginning of this year which requires payment services such as PayPal to send a 1099 for all cumulative sales (except friends and family) totaling $600 and more, I’m wondering how you fanatics that go through lots of selling and buying are going to adapt.

My collection is finished for now, I haven’t been overly fantasizing about other flagships to add to my collection. But of course if one continues to visit head-fi often the temptation to buy yet another set can be overwhelming, and that may lead to selling gear (I’m looking at you, traillii). Given the tax bracket us crazies are likely in, this means to offset the additional expense of selling, the pricing has to reflect our likely tax bracket which would increase our asking price by quite a bit potentially causing less selling activity from our classifieds.

I should point out that when this new tax policy was first announced, I asked in a thread whether someone who is a tax accountant could chime in on whether taking a hit on a previous purchase would exempt one from the increased taxes, and a tax accountant did reply saying no, just because you sold something at a loss in a non-business use scenario does not mean the sale is exempt from the new taxes.

So, I’m wondering how everyone is going to handle this new situation. Some here have enough wealth that this situation is not relevant to them, but I imagine there are some active members here where it is relevant, such as me, who spend large amounts due to our passion for this hobby. Of course, we can always ask for F&F payments in our ads, but head-fi discourages this in its classified rules.

Given the comradery we all enjoy here, how does everyone feel about F&F purchases from known members?

Please let me know if I am missing something. My understanding is that if you sell something you bought at the same or for less than originally paid, there is no tax on the money as there is no profit. You will have to let your accountant know so he fills out the correct form as I am sure this must be listed. You may need your original proof of purchase, or possibly list price works, but not sure on this last point.

 

[jwbrent]

Please let me know if so am missing something. My understanding is that if you sell something you bought at the same or for less than originally paid, there is no tax on the money as there is no profit. You will have to let your accountant know so he fills out the correct form as I am sure this must be listed. You may need your original proof of purchase, or possibly list price works, but not sure on this last point.

Interesting, the tax accountant that replied to my original query wrote the opposite … I’m going to have to research this because if your premise is true, then the stated problem I brought up is irrelevant. Who sells their gear here at a profit except something like a Sony MDR-R10.

 

[discord]

Hey guys,

With the new IRS ruling that took effect at the beginning of this year which requires payment services such as PayPal to send a 1099 for all cumulative sales (except friends and family) totaling $600 and more, I’m wondering how you fanatics that go through lots of selling and buying are going to adapt.

My collection is finished for now, I haven’t been overly fantasizing about other flagships to add to my collection. But of course if one continues to visit head-fi often the temptation to buy yet another set can be overwhelming, and that may lead to selling gear (I’m looking at you, traillii). Given the tax bracket us crazies are likely in, this means to offset the additional expense of selling, the pricing has to reflect our likely tax bracket which would increase our asking price by quite a bit potentially causing less selling activity from our classifieds.

I should point out that when this new tax policy was first announced, I asked in a thread whether someone who is a tax accountant could chime in on whether taking a hit on a previous purchase would exempt one from the increased taxes, and a tax accountant did reply saying no, just because you sold something at a loss in a non-business use scenario does not mean the sale is exempt from the new taxes.

So, I’m wondering how everyone is going to handle this new situation. Some here have enough wealth that this situation is not relevant to them, but I imagine there are some active members here where it is relevant, such as me, who spend large amounts due to our passion for this hobby. Of course, we can always ask for F&F payments in our ads, but head-fi discourages this in its classified rules.

Given the comradery we all enjoy here, how does everyone feel about F&F purchases from known members?

Here’s an official statement from PayPal on this topic:

Q: Will the updated 1099-K Threshold Change apply if I sell personal property, like a couch or an item at a garage sale, for $600 or more if it was sold for less than its original value? Will I be issued a Form 1099-K?​

Form 1099-K is an IRS informational tax form that is used to report goods and services payments received by a business or individual in the calendar year. While banks and payment service providers, like PayPal and Venmo are required by the IRS to send customers a Form-1099K if they meet the $600 threshold amount, there are certain amounts that may be included on the form that are generally excluded from gross income and therefore are not subject to income tax. This includes:

• Amounts from selling personal items at a loss
• Amounts sent as reimbursement
• Amounts sent as a gift

So, for example, if you purchased a couch for $1200 and sold it for $800, this amount would not be subject to income tax.

We encourage customers to speak with a tax professional when reviewing their 1099-Ks to determine whether specific amounts are classified as taxable income.

Taken from here:
https://newsroom.paypal-corp.com/20...eporting-Requirements-Your-Questions-Answered

 

[stacey]

I’d imagine you’d have to keep your receipts!

 

[jwbrent]

Here’s an official statement from PayPal on this topic:



Taken from here:
https://newsroom.paypal-corp.com/20...eporting-Requirements-Your-Questions-Answered

Thank you very much for your post.

 

[HiFiHawaii808]

This is not that tough. If you get a 1099-k, your tax return needs to reflect that amount or you will be subject to audit on that item and if you don't respond to the IRS inquiry, then they will send you a notice that you owe the tax with penalties and interest until you can prove you don't own any tax on it. With the IRS, you are guilty until proven innocent and they can freeze your assets to collect what you owe them. This is why people fear the IRS.

To minimize the chance for an audit, you or your account files a tax schedule that has the 1099-k as the revenue line. Most logical form is schedule D. Worst case is schedule C. You declare revenue and the cost of the item is whatever you paid for it. You need a receipt for it. This is just like what happens when you buy and sell a stock. You will likely have a loss. Any profits offset the losses and the bottom line will be a net profit or loss.

If you have a loss, it will not be deductible against ordinary income. But, it will be deductible against other schedule D (or C) income. So, if you have your own business, there is a good chance that if filed properly, you will be able to deduct the losses against the gains elsewhere. I am not an accountant and I am not 100% sure how it works, but I do run my own business and this is how I would ask my accountant to structure it if he can.

In the past, I just kept all of the losses I have from the buying and selling of personal items as non-taxable since it is nearly always at a loss. But, if they are going to impose this ridiculous reporting requirement on us, then I am going to play the game that they are begging me to play. And, I will get away with it even if audited. The net result will likely be that I will be able to deduct my losses on audio purchases from the profits of like kind investments. The IRS will have to hire thousands of people to wade through this mountain of non-productive bureaucracy to find those who have been running business through Paypal or Venmo and not paying taxes. Accountants will make a ton of money helping people like those of us on this forum and taxpayers will pay for the IRS agents. Will it be net positive? Who knows.

 

[iDesign]

Taxes are hardly the issue with PayPal, its the offshore customer service and lack of seller protections.

 

[Frankie D]

Here’s an official statement from PayPal on this topic:



Taken from here:
https://newsroom.paypal-corp.com/20...eporting-Requirements-Your-Questions-Answered

That is what I thought. However, do you know how we tell PayPal the original cost of the item? Or is that something we have to do later on our taxes? Tks.

 

[Frankie D]

This is not that tough. If you get a 1099-k, your tax return needs to reflect that amount or you will be subject to audit on that item and if you don't respond to the IRS inquiry, then they will send you a notice that you owe the tax until you can prove you don't own any tax on it. With the IRS, you are guilty until proven innocent.

To minimize the chance for an audit, you or your account files a tax schedule that has the 1099-k as the revenue line. Most logical form is schedule D. Worst case is schedule C. You declare revenue and the cost of the item is whatever you paid for it. You need a receipt for it. This is just like what happens when you buy and sell a stock. You will likely have a loss. Any profits offset the losses and the bottom line will be a net profit or loss.

If you have a loss, it will not be deductible against ordinary income. But, it will be deductible against other schedule D (or C) income. So, if you have your own business, there is a good chance that if filed properly, you will be able to deduct the losses against the gains elsewhere. I am not an accountant and I am not 100% sure how it works, but I do run my own business and this is how I would ask my accountant to structure it if he can.

In the past, I just kept all of the losses I have from the buying and selling of personal items as non-taxable since it is nearly always at a loss. But, if they are going to impose this ridiculous reporting requirement on us, then I am going to play the game that they are begging me to play. And, I will get away with it even if audited. The net result will likely be the I will be able to deduct my losses on audio purchases from the profits of like kind investments

Makes sense. Tks.

 

[HiFiHawaii808]

That is what I thought. However, do you know how we tell PayPal the original cost of the item? Or is that something we have to do later on our taxes? Tks.

This is why you need to file a tax schedule. Paypal only knows what you got paid. So, they report the revenue to the IRS and what that does is forces you to file a tax schedule to account for that revenue. As I mentioned before, you have the data and it is in your tax return where you report it. Paypal wants nothing to do with the receipts.

As an aside, if you have a legit business with over $20,000 in revenue, you were getting this 1099-k already. And, if you went through Covid and you had a lot of returns, you need to file the full amount of revenue and have a returns line on your return or once again subject yourself to audit. In my business in 2020, I had probably 35% returns due to covid. So, I refunded a lot of money. But, Paypal reports the total amount collected in the 1099-k not netting out the returns. So, I reported the full amount collected and had a refund line. That's so the lower revenue line does not trigger an audit if you netted out high returns. This is all stuff that people who run businesses deal with every year. It's just now everybody needs to learn how to manage profits, losses and tax reporting. In a weird way, this is actually a good thing because this will force more people to get financially literate on these tax issues related to businesses.

 

[Frankie D]

This is why you need to file a tax schedule. Paypal only knows what you got paid. So, they report the revenue to the IRS and what that does is forces you to file a tax schedule to account for that revenue. As I mentioned before, you have the data and it is in your tax return where you report it. Paypal wants nothing to do with the receipts.

As an aside, if you have a legit business with over $20,000 in revenue, you were getting this 1099-k already. And, if you went through Covid and you had a lot of returns, you need to file the full amount of revenue and have a returns line on your return or once again subject yourself to audit. In my business in 2020, I had probably 35% returns due to covid. So, I refunded a lot of money. But, Paypal reports the total amount collected in the 1099-k not netting out the returns. So, I reported the full amount collected and had a refund line. That's so the lower revenue line does not trigger an audit if you netted out high returns. This is all stuff that people who run businesses deal with every year. It's just now everybody needs to learn how to manage profits, losses and tax reporting. In a weird way, this is actually a good thing because this will force more people to get financially literate on these tax issues related to businesses.

Thanks.

 

[Sound~Patriot]

Hi guys,

just btw. ...selling my AAW Canary, my SP1000M and my Hugo2

PM me if you are interested (Europe).

 

[Steranko]

They look great, but that price is a big big oof. As other have said I definitely get the idea that noble is definitely about making statement/jewelry pieces first and foremost. Nothing wrong with that, but theres certainly a large premium in price for that making pretty much all their higher end IEMs way out of my price range.

I got as chance to test these out here in Hong Kong a number of times using different DAPs. There are right up there with the best. I own the Noble Damascus and I thought that was good already. But this one is another level up. I think this one is up there with the top 2 best IEM on the market at the moment. I couldn't bring myself to spend this sort of money on it but if I had the spare change I would prefer to buy this than any other IEM at this moment. If we think about it they say the cable is worth in the region of $2000. The Damascus steel of the casing (the jewellery) is worth about $2000 as well. The $3000 or so costs is in the IEM internals and packaging, labour, testing, design, etc. Therefore there is not a lot of room to play on the pricing. I would prefer to buy this than OBravo CU or Oriolus Trailli both of which I had tested and played with.
It is definitely one IEM I want in my collection but alas all 89 or so are sold out.....